The Arctic is the First Stop in the United States Reset with Russia

The Arctic is the First Stop in the United States Reset with Russia

Much work is needed to find ways to accommodate Russian fears of NATO encirclement and its concerns that the heavily ethnic Russian populations in Eastern Ukraine and Crimea have political and social protections.  

Throughout the primaries President elect Donald Trump asserted that he wanted to have a more constructive relationship with Russia. Trump correctly asserted that President Vladimir Putin was not someone that the United States could pretend didn’t exist because he both loves his country and is enormously popular with his own people. Trump suggested that the United States needed to get past the finger pointing and find ways in which the United States could work cooperatively with Russia – especially in Syria. Mr. Trump would likely have also said that the U.S. needs to find ways to assuage Russian concerns that they were being politically and militarily encircled by NATO. The Trump approach was labeled by his political adversaries as coddling an authoritarian dictator. Obama by contrast seemed to believe that the only way to deal with Putin was by “calling him out” and imposing economic sanctions to target the most critical sectors of the Russian economy.    

Finding the right approach to Russian behavior towards Eastern Ukraine is something that cannot be ignored since the United States has legal obligations to Ukraine.  Under the December 1994 Budapest Memorandum, the United States agreed to safeguard Ukraine’s territorial integrity in exchange for Ukraine’s giving up its nuclear weapons.  The United States needs to make good on those security guarantees; however, running to a microphone, as Obama did, and denounce Putin as a dictator who jails his own people and a “jackass” at a 2013 G20 meeting does little to advance the cause of constructive diplomacy.  Even if Obama was right to be critical, his public behavior only alienated Putin and made it nearly impossible to have someone to negotiate with.  

Much work is needed to find ways to accommodate Russian fears of NATO encirclement and its concerns that the heavily ethnic Russian populations in Eastern Ukraine and Crimea have political and social protections.  Work is also needed to find a way to work cooperatively – as Trump has suggested – in Syria to end the conflict.  However, denouncing Russia as propping up the dictator Assad is not a constructive approach because it ignores the fact that Russia has had a military relationship with Syria since 1971 (when it first obtained basing rights at the Tartus Naval Base).  Russia, just like the United States when it comes to its own bases in Japan, Germany, and in South Korea, is not anxious to put its only military warm water port in the Mediterranean and its nearly 50 year defense relationship at risk, however flawed the current regime in Damascus.  Demands that Putin throw Assad under the bus also ignore centuries of Russian policy to have warm water ports for its commercial and military purposes.

President elect Trump is likely to find a way to thread the needle in Syria which leads to Assad’s ultimate ouster while at the same time preserving Russia’s legitimate interest in preserving its only warm water port in the Mediterranean.  But, doing this will take a lot of time and there is more promising low hanging fruit that will jump start a reset. 

The Reset Needs to Start in the Arctic.  

What has not been worked over the past three years has been the relationship between the United States and Russia in the Arctic.  Apart from annual meetings between the two countries coast guards, very little transpires between the two countries on Arctic maters.  Arctic policy has been relegated to the backwater in U.S. foreign policy even though, in many respects, the Arctic holds the keys to the U.S. economic and energy security. An especially worrisome outcome of this benign neglect is China’s unchecked political and economic gains in the Arctic which, if left unchecked, threaten to undermine U.S. and Russia’s political and economic interests the Arctic. Given these developments and parallel interests, the Arctic is a logical place where the United States and Russia can build a robust cooperative relationship.  If successful, then some of the more protracted bilateral problems can be tackled.  

Why the Arctic?

Many in the current Administration view the Arctic as home to cuddly Polar Bears and research centers to document the affects of climate change.  But, the facts on the ground – and water – are far different.  The Arctic is warming twice as fast as the rest of the planet. Rising temperatures are in turn opening the Arctic to increased human activity like never before especially in places like Northern Canada and Greenland where huge swaths of coastal lands rich in minerals are now accessible for exploitation. In many respects, the changes in the Arctic is resulting in the creation of a new ocean that can be used for fishing, oil and gas, and for ship transportation between Asia and Europe.     

The resource projections are breathtaking. Over 80 percent of Russia’s unrecovered natural gas and 70 percent of Russia’s unrecovered petroleum are in the Arctic regions, primarily in the Barents and Kara Seas and in the Timan-Pechora basin. According to a 2008 U.S. Geological Survey (USGS) report: “The extensive Arctic continental shelves may constitute the geographically largest unexplored prospective area for petroleum remaining on Earth.” The USGS estimates that 13 percent of the world’s undiscovered oil reserves (90 billion barrels) and 30 percent of the undiscovered gas reserves (1,700 trillion cubic feet of natural gas, and 44 billion barrels of natural gas liquids) are in the Arctic. These estimates are in addition to more than 240 billion barrels of petroleum reserves that have already been discovered.

It is also a forgone conclusion that as the Arctic Ocean becomes free of ice for longer periods of time, there will be market pressures for the vast resources in the Arctic to be exploited.   These resources include hydrocarbons both onshore and offshore, minerals, fisheries, and “access” for purposes of tourism and navigational convenience. The problem is that as this area opens up for human activity, the United States has stayed mostly on the sidelines as states like Russia, Greenland, and Iceland and Norway seek to “cash in” on the Arctic’s riches. Indeed, a major casualty of the U.S. sanctions program was Exxon Mobil that had entered into a major joint venture with the Russian Oil company Rosneft to conduct exploratory drilling of seven offshore sites in the Arctic and planning for a major liquid natural gas (LNG) project for the Russian Far East. That Exxon/Roseneft effort resulted in major new oil finds in the Kara Sea. In addition to Rosneft, the American sanctions preclude transfers of oil and gas technology, goods and services to the Russian energy companies Gazprom, Gazprom Neft, Lukoil, and Surgutneftegas. This was a major blow to Exxon to bolster its production in the Arctic and establish a U.S. presence in the Arctic offshore oil market as many of its fields around the world are declining.

At the same time as sanction crippled Exxon-Mobil’s effort to gain a toe-hold in the drilling activity in the Russian Arctic, U.S. officials had second thoughts about its past licenses to Shell Oil to drill exploratory wells in the Chucki Sea. After some initial setbacks due to weather and other factors and huge safety demands levied upon it by the U.S. government, Shell saw the handwriting on the wall and in September of 2015 abandoned the roughly $2 billion it had paid the U.S. Department of Interior to conduct exploration in territories off Alaska’s Coast. Despite the fact that Shell took massive financial losses, the point person in the U.S. government leasing program - Deputy Secretary of the Interior David Hayes – was cited by Forbes as rejoicing in the “huge and welcome” news that Shell was abandoning its multi-billion offshore oil leases in the U.S. Chucki Sea.

Enter the Dragon

Though environmentalists celebrate these setbacks, what they fail to realize is that activities in the Arctic are not standing still since the U.S. only controls a fraction of the Arctic Ocean’s coastline. The vacuum created by the sidelining of these two very large and well-capitalized oil companies is now being filled by Chinese oil and gas and mineral companies that are anxious to extract the Arctic’s vast oil and gas and mineral wealth to fuel the Chinese economy.  

Some, including this author, forcefully argued that the Arctic states - under the umbrella of the Arctic Council - needed to develop rules of the road as relates to shipping, oil and gas, and mining activities to ensure that these industrial operations are sufficiently well capitalized and comply with high safety and environmental standards. This approach has to be on a multilateral level since most of the resource activity will take place in countries like Canada, Greenland, and Russia that share the Arctic Coastline with the United States. Because of the closed nature of the Arctic Sea, high standards are beneficial to all because an accident in one country will likely affect the water column and coastline of other countries. The Arctic Council was suggested as the best place to do much of this because it was the only multilateral entity in the Arctic and because the United States had the power as the Chair of the Artic Council from 2015 through April 2017.